Indian Billionaire Loses $3 Billion as Mobile Price Wars Continue
Finance

Indian Billionaire Loses $3 Billion as Mobile Price Wars Continue

It has emerged that the troubles with Vodafone’s operations in India have resulted in a $3 billion loss for Kumar Mangalam Birla. Vodafone’s India arm is in extreme financial distress, and since the Aditya Birla Group had been the second-biggest investor in the whole venture.

In 2018, the Indian tycoon Kumar Mangalam Birla had decided to invest in Vodafone’s operations in India. However, the spiraling losses and debts have resulted in rapid erosion in equity.

The downward slide started back in 2017, and all told, the tycoon is now $3 billion in the red due to this venture. That is not all; the shares of other businesses owned by Birla’s group, like cement, chemicals, and metals, have also slumped due to demand deficit.

The Bloomberg Billionaires Index reveals that two years ago, he had a net worth of $9.1 billion. However, his net worth is now down to $6 billion.

Almost the entirety of his fortune is tied up in his holdings in businesses owned by the Aditya Birla Group. The mobile phone services space in India has seen intense competition ever since Reliance Jio entered the market back in 2016. To compete, Vodafone merged with Aditya Birla Group’s Idea.

However, last week, Vodafone Idea reported the worst corporate loss in Indian history, and the British telecommunication company stated that there is a chance of complete collapse.

The company’s troubles were compounded back in October when India’s supreme court agreed with the government’s demands for a $4 billion in arrears fees. Because Vodafone Idea was already had debts worth $14 billion, it proved to be a massive blow for the company.

Rishikesha T. Krishnan, a business strategy professor at the Indian Institute of Management, Bangalore, spoke about the company’s troubles. He said,

Vodafone and Idea have been going through a complex merger and, at the same time, trying to keep their heads above water in the battle with Reliance Jio. The Supreme Court judgment came at the most inopportune time.

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